- Yen near lowest level since 2007 against British pound
- Traders on alert for intervention, wary of Tokyo's new strategy
- Dollar shaky as Fed rate hike bets recede
SINGAPORE, July 7 (Reuters) - The yen hovered near a four-decade low on Tuesday, leaving traders wary of possible intervention by Japanese authorities to bolster the currency, while the dollar steadied after recent losses.
The yen was up 0.2% at 161.75 per dollar, reversing some of its decline from earlier in the session, though it remained not far from a 162.84 trough hit last week.
Against the British pound , the Japanese currency fell to its lowest since 2007 at 217.20, before paring some losses. The euro last bought 184.99 yen , after rising 0.5% in the previous session.
"There had been speculation at the end of last week that Japan could intervene again to support the yen during the U.S. holiday when trading conditions were less liquid, but no action has been taken, contributing to the yen giving back some of its recent gains," said Lee Hardman, senior currency analyst at MUFG.
The yen found some support late last week as traders grew wary of a possible shift in Japan's intervention strategy, though they said the currency's sudden jump on Thursday was not indicative of official action.
FED HIKE BETS RECEDE
In the broader market, the dollar wobbled as investors continued to pare back expectations of U.S. rate hikes this year following an underwhelming jobs report that came in far below expectations.
The euro dipped 0.06% to $1.1434, while sterling rose to a more than two-week high of $1.34005 before easing slightly.
Against a basket of currencies, the dollar was last at 100.90.
Investors are now pricing in roughly 29 basis points worth of Federal Reserve rate hikes by December, down from about 38 bps a week ago.
"I think current market pricing is probably a little bit underpriced...we still think that the FOMC will have to start tightening from December...markets are thinking that the rate-hiking cycle will start a little bit sooner than we expect, but the extent of the (hikes) is still below our expectations," said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
Focus now turns to the minutes of the Federal Open Market Committee's (FOMC) June meeting on Wednesday for clues about the rate outlook.
"We know that (Chair Kevin) Warsh doesn't like providing forward guidance, so I think the minutes tomorrow will probably be less informative than previous minutes," Kong said.
In other currencies, the Australian dollar fell 0.26% to $0.6938, while the New Zealand dollar was little changed at $0.5700.
Reporting by Rae Wee; Editing by Jamie Freed and Jacqueline Wong
Source: Reuters